Espen Johannesen TF Bank

“We grow in a controlled manner without unnecessary risk taking”

In July 2015, TF Bank acquired the Norwegian niche bank BB Bank. Since then, BB Bank has been able to deliver an accumulated profit after tax that exceeds the purchase price, and the company’s loan portfolio has become 10 times larger – while maintaining the high credit quality and low loan loss levels. Espen Johannesen, CEO of BB Bank and head of TF Bank’s largest segment Consumer Lending, tells about the journey since the acquisition and the potential ahead.

“I had worked in BB Bank for six years when the acquisition took place, and was appointed CEO at that time. With TF Bank as owner, BB Bank was provided with new opportunities and trust to create growth. We received liquidity and capital, and could benefit from TF Bank’s modern IT setup. At the same time, we kept our semi-automated underwriting workflow, which is very much part of BB Bank’s success formula. Step by step, we began to build up the lending volume, while maintaining the quality of the portfolio. Throughout the years, it has been a guiding principle that we grow in a controlled manner without unnecessary risk taking.”

BB Bank today offers unsecured consumer loans, savings accounts and credit cards in the Norwegian market. At the end of 2018, the average loan amounted to SEK 97,000, which is considerably lower than with other niche banks in Norway.

“The average loan has increased in recent years, but we have not changed our model and for the past decade we have had the lowest loan loss levels in Norway compared to peers. Our customers mostly borrow on rational grounds when they have a real need, and rarely for pure consumption. We don’t pay out a loan if we don’t believe that the customer can repay it, it as simple as that. I wouldn’t want to run a business where we put people in difficult situations.

Important elements of the growth strategy have been to streamline the business and engage talented employees. A key milestone was when the company received a Norwegian banking licence in 2017, from a former license as financial institution. This also enabled the bank to take deposit products into its offering, with a government deposit guarantee scheme in Norway amounting to NOK 2 million.

“You can’t be good at everything, and we have, among other things, wound up BB Bank’s previous portfolio of car loans and mortgages, as well as a collection business. With a focused offer, we can put even greater efforts into the customer process and journey, for which we have great respect. Another important aspect of our development is the team of young educated people with ambitions and bright minds that we have built over recent years. We are looking for people who are humble and understand that success does not come overnight. It takes time to find them, but it’s worth every minute. I am extremely proud of our employees and everything that we have accomplished together.”

BB Bank was founded in 1982 and can thus name itself one of Norway’s oldest niche banks. Like the parent company TF Bank, the long history is beneficial when growing, but also in times of macroeconomic concern.

“We have the risk consciousness and modesty with us in everything we do. This applies not only to BB Bank but also to TF Bank as a whole. We have been a perfect match, and BB Bank has become an instrumental part of the group’s Consumer Lending segment.”

Espen Johannesen was appointed Head of Consumer Lending and part of TF Bank’s executive management team in 2017. In 2018, the loan portfolio for Consumer Lending increased by 35%, and the Norwegian business showed particular strength.

“We have exhibited growth with satisfying margins and good credit quality, and this is how we will continue to work. I see great potential in Norway as well as our other markets. One major advantage for TF Bank is that we can choose to allocate capital to so many different countries and hence be able to optimize growth and profitability. Thereby, we can create increased shareholder value over time. When we have now entered 2019, we see good opportunities for continued growth with an attractive risk-reward balance.”

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